Bank of America Corp (NYSE:BAC) is facing a class action lawsuit, on charges of extorting excessive fees from prison inmates, in Arizona. The lawsuit claims that the bank exploited one of the most vulnerable groups. Prisoners being released from Arizona prison were issued debits cards by the banks, on account of not having a job or place to live in.
It should be noted here that an estimated 19,000 inmates are released from prison, every year, as per the department of corrections. Moreover, BAC reserves exclusive rights to issue debit cards to these people, as well as the right to impose any terms it deems suitable. The lawsuit also claims that the debit cards are the only way the inmates are able to get back the money confiscated from them, at the time of arrest and the money they earn through work programs.
As per the court filing, Bank of America is being accused of misusing a loophole in federal regulations, which was originally meant to protect the rights of other BAC customers. In addition to this, BAC is also accused of exorbitant pricing for providing services to inmates. Analysts at Zacks have noted that the BAC is the latest bank to face such charges, earlier JPMorgan Chase & Co. faced a similar lawsuit, in August 2016. The lawsuit was dropped after a settlement was reached, which require JPM to pay approximately $0.45 million.
Earlier, Bank of America announced that it would double its commitment to the Affordable Loan Solution, being offered in collaboration with Freddie Mac (OTCMKTS:FMCC). As such, the bank would now contribute $1 billion per year, to the venture fund. It should be noted here that the venture has been instrumental in helping 90% of its recipients in securing home ownership financing. This is also accompanied by improvements in cycle times and automated underwriting, for eligible customers.
Bank of America Corp (NYSE:BAC) had a trade volume of 91.58 million and gained 2.78% in terms of share value, during the November 7 trading session. The stock closed at a share price of $17.01, at the end of the session.